The Confederation of British Industry (CBI) has revealed rising costs have hit profits in the UK’s services sector.

According to the CBI, profitability in the professional services sector and the consumer services sector was flat for the three months to August.

Both sectors have witnessed growing costs, which have fed into selling prices with heightened inflation in both of the sub-sectors.

“Although consumer services growth inched up last quarter, overall services sector growth was fairly muted,” said Rain Newton-Smith, the CBI chief economist. “And with cost pressures rising, services firms are not seeing any improvement in their bottom lines.”

“The underlying challenges facing the sector are not going away any time soon. Demand growth is expected to remain subdued next quarter and firms seem hesitant over the prospects for expanding their businesses in the year ahead. They still plan to take on new workers next quarter, but the confidence to invest significantly more is lacking.”

“Above all, the government and Brussels need to get on with finalising a withdrawal agreement, putting pen put to paper on a jobs-first transition period and, finally, agreeing a new relationship between the UK and the EU that puts people’s livelihoods above politics.”

The CBI has added that next quarter, prices are expected to remain stable in business and professional services, but to rise at an accelerating rate in consumer services.

The broader economic outlook remains fairly subdued and the UK GDP growth has been held back by weak household income growth and the impact of Brexit uncertainty on investment.